The Financial Supervisory Commission (FSC) has suspended consideration of IBF Financial Holdings Co’s (國票金控) proposal to fully acquire EnTie Commercial Bank (安泰銀行), as IBF Financial had failed to address four of the commission’s doubts about the deal, Banking Bureau Director-General Sherri Chuang (莊琇媛) said yesterday.
The four doubts regard IBF’s financial strength, its funding resources, the benefits from consolidation and job protection, Chuang said.
IBF Financial can refile its application after it fully addresses these issues, Chuang said.
Photo: CNA
“We noticed that nearly half of the company’s board of directors did not support the merger, and some lawsuits have even been filed amid disputes,” Chuang said. “Under these circumstances, the acquisition of EnTie bank might not be beneficial for IBF Financial’s operation.”
Seven members of IBF Financial’s 13-seat board voted for the acquisition, with six against, she said.
The commission said that IBF Financial should ideally have support from a larger majority of its board members’ and shareholders before reopening the application, she said.
As IBF Financial has invested in the online Rakuten International Commercial Bank Co (樂天國際商銀), and both the online bank and EnTie bank might need capital injection in the future, the FSC questioned whether IBF Financial would have sufficient capital to support both banking units, Chuang said.
IBF Financial plans to acquire EnTie’s shares through a cash-and-share swap. Each EnTie shareholder would receive NT$9.46673 in cash and 0.493344 class A preferred shares, which could be converted to IBF’s common shares after one year for each EnTie share, corporate data showed.
However, the commission is concerned that the swap plan could weaken IBF Financial’s shareholding structure, as the financial service provider did not receive overwhelming support from its board members for the merger, and it might need to seek investors to subscribe to as high as 26 percent of the new shares that are to be issued to fund the merger, Chuang said.
“IBF did not clearly explain who the investors would be. If most of the new shares are to be bought by specific individuals, the buyers could become major shareholders. We would need to review the shareholders’ qualifications,” Chuang said.
IBF Financial said that it would talk with the regulator and make a case for the deal.
EnTie Bank said that its operation would continue unchanged despite the FSC’s rejection of the merger, it said.
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